Consumers are continuing to progress on the long journey toward restoring their faith in the American economy, according to a monthly Consumer Confidence Index report released by the Conference Board.
The index, one of the leading predictors of economic growth in all sectors of the economy, now stands at 85.2, up from 82.2 in May. The largely positive findings could indicate that consumers are more ready now than they have been since the economic downturn to commit to larger, longer-term purchases.
The survey measures month-to-month consumer feelings on both the present economic situation and their expectations for future growth. Consumers continue to believe that the current economic situation is improving. The Present Situation Index increased to 85.1 in June from 80.3 in the previous month. Those claiming business conditions are "good" increased to 23.0 percent from 21.1 percent, while those stating business conditions are "bad" decreased to 22.8 percent from 24.6 percent.
The Expectations Index rose to 85.2 from 83.5 in May. The percentage of consumers expecting business conditions to improve over the next six months increased to 18.8 percent from 17.7 percent. However, that enthusiasm was tempered by those expecting business conditions to worsen, which also increased to 11.4 percent from 10.7 percent.
The labor market is also expected to improve, with those anticipating more jobs in the months ahead increasing to 16.3 percent from 15.2 percent and those anticipating fewer jobs dropping to 18.7 percent from 18.9 percent.
"Consumer confidence continues to advance and the index is now at its highest level since January 2008," said Lynn Franco, director of economic indicators at the Conference Board. "June's increase was driven primarily by improving current conditions, particularly consumers' assessment of business conditions. Expectations regarding the short-term outlook for the economy and jobs were moderately more favorable, while income expectations were a bit mixed. Still, the momentum going forward remains quite positive."
The positive uptick in consumer confidence could be an indicator that more Americans are confident enough in the prospects of their economic health that they are more willing to commit to putting down roots and purchasing a home. Such confidence would be a signpost of a coming upswing in housing demand for the summer and fall.
However, the results should be held in tension with the conflicting May 2014 National Housing Survey released by Fannie Mae indicating that consumer concerns about the direction of the economy and their household income appear to be weighing on the growth of the housing market.